Ahead of a scheduled meeting this week between the National Association of Realtors' legal team and the Department of Justice investigators looking into the NAR's virtual office website policy, a leak informed the Wall Street Journal (WSJ) of the DOJ's possible intent to file an anti-trust suit against the NAR.

Unnamed attorneys "close to the case" told WSJ reporters that the DOJ "is expected" to charge that the NAR "illegally adopted practices intended to stifle Internet-based rivals and discounters."

The almost-a-story made front page news.

The NAR bylaw, insinuates the WSJ report, "would allow its more than 1.2 million members to withhold property listings from online brokers."

The story, inflammatory in its implications, concerns the NAR's virtual office website (VOW) policy, which outlines rules for MLSs to set its members up to display listings on each other's websites using listings direct from the MLS database. Because state laws do not allow brokers to take another broker's listings and advertise them without permission, the NAR VOW rules suggest that brokers should have the right to restrict the blanket use of their listings by competitors. Otherwise, the MLS tail is wagging the broker dog.

The NAR maintains that it is facilitating virtual office websites for all brokers by helping MLSs establish rules to follow that are fair to all concerned, not just the smaller, newer or discount brokers who depend on other people's listings to build business. Like the mask of Oz, a VOW is an advertisement. When strengthened by the generous addition of other brokers' listings, a VOW can make any broker operating it appear larger and more powerful than he or she really is.

Both the NAR and the DOJ deny any knowledge of the WSJ story, which may have been planted to make the NAR back down before talks with the DOJ, scheduled this week. Also on the calendar is a highly publicized visit from the President of the United States, George W. Bush, who will speak to the 8,500 Realtors gathered for the NAR's mid-year convention in Washington, on Friday, May 13th, at a special session.

"There's no such thing as coincidence," observes Steve Cook, spokesperson for the NAR. "It will be interesting to have the President speaking to us Friday morning after all this talk."

Cook says the DOJ attorneys have not said they were filing suit, and that it is professional legal courtesy to tell the other side if such a suit were pending. "We have been in negotiations with the DOJ for two years since the first civil investigation demand (CID) was issued," says Cook. "They have not called us to let us know they are filing papers. We are meeting with them this week."

Is this a dirty trick to make the NAR back down ahead of scheduled discussions with the DOJ?

"It doesn't make it any easier," concedes Cook, "but we are adamant that our position is the right one, and we are legally correct and that it is a principle worth fighting for. Maybe the DOJ wanted to test our confidence. The issue is the broker's rights to market properties for their clients -- the intellectual property of listings. Those people who find the customer, work to put the listing together and create the marketing plan to market the property should have the right to advertise their listing where and how they wish."

Meanwhile, the DOJ denies leaking the story.

Gina Talamona, spokesperson for DOJ, says, "Our investigation is ongoing, but as to who leaked that to the WSJ, we have no clue. The antitrust division is investigating the potential competitive impact of certain rules involving the display of residential real estate listing data over the Internet. We aren't saying who we are investigating or what action we may or may not take."

In the WSJ story, it says that "lawyers close to the case" said that "The Justice Department is expected to charge that the NAR, in a proposed 2003 bylaw (the virtual office website policy) illegally adopted practices intended to stifle Internet-based rivals and discounters."

"It doesn't say Federal lawyers," points out Talamona. "It's not coming from here. I'm confirming what I'm giving you."

She also notes that the WSJ took liberties with her quote in the story, saying that she declined to comment on the "timing of any legal action."

"I haven't talked about whether there would be any legal action," says Talamona. "I would never comment on that kind of thing. I don't even confirm to anyone who we may or may not be investigating."

If "lawyers" working for either discount brokers or third-party service providers are attempting to influence the outcome of the discussions, their plan worked as far as getting more exposure for the issue. Reuters and numerous other media have picked up the story, making the NAR and its members look bad nationwide.

But the strategy could backfire. An old saying goes, "Be careful what you wish for, you just might get it."

Discount and third-party vendors with a stake in the issue may find that the competitors they so desperately want to share listings could leave them with nothing:

• MLSs have to create, or buy the technology to share listings to VOWs. Members could simply vote not to go to the expense. Then no one would have MLS access to listings.

• MLSs could simply vote not to implement the NAR's policy, or drag their feet for years so that no one has MLS listings.

• MLS membership isn't mandatory. Major brokers could decide that rather than suffer more DOJ scrutiny and media embarrassment, they will simply withdraw from the MLS and use their own websites as mini-MLSs, as they already do in many parts of the country, including large markets like Manhattan.

• Brokers could withdraw from association-run MLSs and start, or join, broker-owned MLSs where they can set their own rules for owners and subscribers.

Published: May 10, 2005

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Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. For more articles by Blanche, click here.